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Supporting the economy

Pioneering bonds to fight climate change in Germany

20/03/2018

When LBBW, the German landesbank, launched a EUR750 million 4-year Climate Bond late in 2017, it broke new ground for financing energy-efficient buildings in Germany.

The bond pioneered the country’s first methodology for endorsing buildings as having low carbon emissions. Buildings account for a high proportion of greenhouse gas emissions, so incentivising energy efficiency is essential. LBBW’s green bonds will finance and refinance loans for new, existing and refurbished buildings in Germany, as well as providing finance for wind and solar energy.

 

As Joint Structuring Adviser, Societe Generale played an important part in launching the bond, which depended on a methodology to identify buildings that would allow it to qualify for certification under the Climate Bond Initiative. This not-for-profit organisation certifies bonds for financings consistent with a rise of no more than two degrees Celsius in the Earth’s temperature, regarded by the scientific community as the threshold for dangerous global warming.

Societe Generale helped us to set up a climate bond framework that underlines LBBW’s sustainability credentials and set market standards for the selection of energy-efficient green commercial buildings in Germany,

Andreas Wein
Head of Funding & Investor Relations, LBBW

Launched in December 2017, the bond was marketed as a Green Bond under the International Capital Markets Association’s Green Bond Principles. Additionally, Drees & Sommer Advanced Building Technologies GmbH subsequently developed a methodology for showing which buildings were among Germany’s 15% most energy-efficient, allowing the bond to meet Climate Bond Initiative criteria.

Frankfurt’s 42-floor OpernTurm (Opera Tower) is an example of an office building being refinanced by the bond. The building uses 23% less energy than the minimum level set in Germany’s EnEV 2007 regulations, due to a natural stone façade, an optimised climate concept, and a hybrid heating and cooling ceiling.

This mandate represents Societe Generale’s first ever green bond structuring role for a financial institution and is testament to our strong relationship with LBBW following multiple mandates since 2015. We achieved the tightest pricing to date for a green senior bond from a German financial institution.

Simon Holz
DCM Head of Financial institutions in Germany, Austria, Switzerland and the Netherlands